British travel firms see rise in fixed-price bookings

Pedestrian walk near a sign outside a branch of Thomas Cook in London December 14, 2011.

Reuters/Toby Melville

LONDON British travel groups TUI Travel and Thomas Cook reported a big rise in fixed-price holiday bookings as cash-strapped Europeans opt for risk-free deals in a volatile economic climate.

TUI Travel, Europe's largest tour operator, said summer bookings by Britons were up 9 percent and were 10 percent higher from the Nordic countries.

"More people are booking all-inclusive holidays, which is very attractive at the moment, given the strengthening of the euro against the pound," Peter Long, chief executive of TUI, which owns the Thomson and First Choice, said on Thursday.

Thomas Cook confirmed the trend. Bookings for summer 2013 from northern Europe were up 17 percent on last year, with continental Europe also higher, the group said in a statement.

Chief Executive Harriet Green said the company had seen good demand for package holidays with Spain, Turkey and Greece proving to be popular destinations.

Travel firms and airlines across Europe have seen bookings fall over the last two years, hit by the euro zone debt crisis, high fuel costs and turmoil in Greece, one of the continent's main holiday destinations.

Thomas Cook, the world's oldest travel group, has issued a string of profit warnings and has been forced to renegotiate bank loans and make disposals to cut debt.

However, the 172-year-old firm said its turnaround plan was on track after it reported reduced first quarter operating losses and said it had cut costs and debts.

"This quarter we delivered the first quarterly improvement in profits for two years," said Thomas Cook's Green said.

Since travel industry outsider Green took over as CEO last May, the company has seen a steady improvement in its finances.

"The new management team has made a solid start. The real test will come in future years, but in the meantime 2013 is likely to remain a honeymoon period for new management," said Peel Hunt analyst Nick Batram.

Some analysts say austerity measures across Europe will hold back demand for leisure travel, with brokerage Morningstar expecting TUI's tour package revenues to remain flat over the next five years. (Editing by Louise Ireland)